Focus on Ag

March 13, 2023

WASDE REPORT SHOWS MIXED RESULTS FOR CORN AND SOYBEANS

The March 8 USDA World Supply and Demand Estimates (WASDE) report did not have many significant changes from the February WASDE report. The biggest change was a larger than anticipated reduction in expected 2022-23 corn export levels, along with a corresponding increase in estimated corn ending stocks at the end of the current marketing year. On the flip side, USDA projected a slight reduction in 2022-23 soybean ending stocks due to an anticipated increase in soybean export levels. All eyes will now be on the USDA 2023 Prospective Planting and Grain Stocks reports that will be released on March 31.

CORN

The latest WASDE report continued to show the total 2022 U.S. corn production at 13.7 billion bushels, which compares to production levels of just under 15.1 billion bushels in 2021 and 14.1 billion bushels in 2020. The recent USDA report also showed that the total demand for corn usage in 2022-23 at just over 13.8 billion bushels, which is down considerably from total corn usage levels of 14.9 billion bushels in 2021-22 and 14.8 billion bushels on 2020-21. Corn export levels were reduced by 75 million bushels in the March report due to sluggish export sales thus far in the 2022-23 marketing year. Corn export sales for the year are now estimated at 1.85 billion bushels, compared to 2.47 billion bushels in 2021-22 and 2.75 billion bushels on 2020-21. USDA estimated the total corn used for ethanol production in 2022-23 at 5.25 billion bushels and the total corn used for livestock feed at 5.69 billion bushels, both of which are down slightly from levels in the 2021-22 marketing year.

USDA is now estimating 2021-2022 U.S. corn ending stocks at 1.342 billion bushels, which is an increase of 75 million bushels from the February WASDE report, representing the projected decrease in corn export levels. The 2022-23 corn ending stocks would still be at the second lowest level in the past nine years and would compare to a carry-out level of 1.377 bushels in 2021-22 The 2022-23 stocks-to-use ratio is estimated at 9.7 percent, which is almost identical to the 9.8 percent projection a year ago in March. The current stocks-to-use ratio remains quite tight compared to recent corn stocks-to-use ratios of 13.7 percent for 2019-20, 14.6 percent for 2018-19, and 14.5 percent in 2017-18. This means that there continues to be potential for short-term rallies in the cash corn market in the coming months, especially in areas of the U.S. with tight supplies and high local corn demand.

USDA is currently estimating the U.S average on-farm cash corn price for the 2022-2023 marketing year at $6.60 per bushel, which was decreased by $.10 per bushel from the February estimate. The projected 2021-22 market year average (MYA) corn price represents the highest estimated WASDE corn price since the 2013-14 marketing year. The current projected 2022-23 average price compares to recent national average corn prices of $6.00 per bushel for 2021-22, $4.53 per bushel in 2020-21, $3.57 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel for both 2017-18. The 2022-23 WASDE price estimates are the expected average farm-level prices for corn and soybeans for the 2022 crop from September 1, 2022, through August 31, 2023; however, they do not represent the estimated prices for either the 2022 or 2023 calendar year.

SOYBEANS

The latest USDA report kept the final 2022 U.S. average soybean yield at 49.5 bushels per acre, which is 2.2 bushels per acre below the final U.S. average yield in 2021. Total U.S. soybean production for 2022 is estimated at 4.276 billion bushels, which is a decrease of 189 million bushels from final 2021 production levels. The recent WASDE report estimates total soybean demand at 4.355 billion bushels for the 2022-23 marketing year, which is an increase of 15 million bushels from the February WASDE report but would represent a decrease of 124 million bushels from 2021-22 soybean demand levels. Expected soybean export levels were increased by 25 million in the March report compared to a month earlier; however, export levels would be 109 million bushels below 2021-22 exports. Soybean crush levels are expected to increase slightly in the current marketing year.

The U.S. soybean ending stocks for the 2022-23 marketing year in the latest WASDE report are estimated at 210 million bushels, which was a decrease of 15 million bushels from the February WASDE report. The projected soybean ending stocks for the current year would be among the lowest soybean carryout levels in past decade. The projected 2022-23 soybean ending stocks compare to recent year-end carryout levels of 274 million bushels for 2021-22, 257 million bushels for 2020-21, 525 million bushels for 2019-20, 913 million bushels for 2018-19,and 438 million bushels for 2017-18.

The soybean stocks-to-use ratio for 2022-23 is now estimated at only 4.8 percent, which is a decline from the low ratios of 6.1 percent in 2021-22 and 5.7 percent in 2020-21. The projected 2022-23 ratio is considerably lower than other recent soybean stocks-to-use ratios of 23 percent for 2018-19 and 13.3 percent for 2019-20. The lowest soybean stocks-to-use level in recent times at 2.6 percent in 2013. The expected rather tight soybean supply may offer some opportunities for continued strong cash soybean prices in the coming months, especially if the projected lower soybean production levels in Argentina become reality and soybean export levels remain strong.

USDA is now projecting the U.S. average farm-level soybean price for the 2022-2023 marketing year at $14.30 per bushel, which is unchanged the February estimate. The estimated 2022-23 market year average soybean price would be the highest since the 2013-14 marketing year. The 2022-23 price estimate compares to other recent yearly average soybean prices of $13.30 per bushel in 2021-22, $10.80 per bushel in 2020-21, $8.57 per bushel for 2019-20, $8.48 per bushel for 2018-19, and $9.35 per bushel for 2017-18.

WHEAT

Not much has changed in dynamics of the global wheat market or the WASDE report for wheat in the past year. A year ago, grain marketing analysts had their eyes on Eastern Europe following the Russian invasion of Ukraine. A year later, the Russian war in Ukraine continues and the rest of the World seems to have somewhat adjusted to this scenario as it relates to the global wheat market. Ukraine and Russia accounted for nearly 30 percent of global wheat exports prior to the initiation of the war in early 2022. The ongoing war will likely continue to greatly reduce wheat production in Ukraine and will continue to impact grain trade in Eastern Europe. Depending on 2023 wheat production in other areas of the World, the continued war in Ukraine may offer some wheat export opportunities for the U.S. in the coming months. However, USDA is projecting a slight decrease in U.S. wheat exports for the 2022-23 marketing year in the latest WASDE report.

The March 8 WASDE report estimated the total 2022-23 wheat supply at just under 2.47 billion bushels, which compares to over 2.59 billion bushels a year ago. The total projected wheat usage for 2022-23 is 1.9 billion bushels, which is nearly the same as 2020-21 usage levels. The report estimated the wheat ending stocks for 2022- 23 at 568 million bushels, compared to 698 million bushels in 2021-22 and 845 million bushels in 2020-21. The 2022-23 farm-level average wheat price is now projected at $9.00 per bushel, which is unchanged from the February estimated priced. The 2022-23 wheat price estimate compares to other recent MYA price levels of $7.63 per bushel in 2021-22, $5.05 per bushel in 2020-21, $4.58 per bushel in 2019-20, $5.16 per bushel in 2018-19, and $4.72 per bushel in 2017-18. The MYA price for wheat and other small grains is the average farm-level price in the U.S. from June 1 until May 31 each year.

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Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President,

MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960)

E-mail — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/